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Last Updated : Feb 27, 2020 09:29 AM IST | Source: Moneycontrol.com

Market Headstart: Nifty likely to test 11,600 levels; F&O expiry to keep trade volatile

Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 93 points loss or 0.79 percent. The Nifty futures were trading around 11,725-level on the Singaporean Exchange.

The Nifty50 is likely to test 11,600 levels on Thursday tracking muted trend seen in other Asian markets. But, trade is likely to remain volatile as traders will roll over their positions from February series to March 2020 series.

Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 93 points, or 0.79 percent, loss. The Nifty futures were trading around 11,725-level on the Singaporean Exchange.

Bears continued their dominance on D-Street for the fourth consecutive day in a row on Wednesday and pushed benchmark indices below crucial support levels. The S&P BSE Sensex broke below 40,000 while the Nifty50 breached its 200-Day Moving Average (DMA).

Close

Let’s look at the final tally on D-Street on February 27 – the S&P BSE Sensex closed 392 points lower at 39,888 while the Nifty50 lost 119 points to close at 11,678.

Sectorally, the telecom index closed in positive while selling pressure was seen in realty, auto, capital goods, oil & gas, power, energy, and metal stocks.

In the domestic market, auto stocks felt the heat as some of the automakers such as Tata Motors and TVS Motor have already warned of a hit to production due to the virus outbreak.

The Indian rupee settled for the day higher by 20 paise at 71.65 (provisional) against the US dollar on Wednesday in line with other Asian currencies, helped by lower crude oil prices.

On the institutional front, FPIs were net sellers in Indian markets for Rs 3336 cr while the DIIs were net buyers to the tune of Rs 2785 cr, provisional data showed.

FPIs have pulled out more than Rs 8000 cr from Indian equity markets so far in the month of February amid rising fears of Coronavirus which is slowly spreading to other countries.

Big News:

Indian stocks to rise marginally in 2020; Sensex seen at 42K by mid-2020: Reuters poll

The benchmark BSE Sensex Index, which rallied over 14% in 2019, has plunged this week, echoing a global sell-off caused by the spread of the coronavirus. Most forecasts in the poll were collected last week.

The annual government budget on Feb. 1 also failed to impress stock market traders and investors, leading the index to a daily decline of more than 2%.

The latest Reuters survey forecast the BSE Sensex index would gain over 4% to 42,000 by mid-2020 from Tuesday’s close of 40,281.20, down from the 42,696 predicted three months ago, said the report.

It was expected then to rise to a record high of 43,560 by the end of the year - also down from the 43,645 predicted in the November poll - the forecast full-year gain of 5.6% would be the smallest in four years, it said.

Technical View:

Nifty formed a Bearish candle on the daily charts. It slipped below its 200-DMA placed at 11,684 on daily charts.

The index has been falling since 19 February. This is the fourth consecutive session when Nifty registered a negative close. The Supertrend indicator gave a ‘sell’ signal on the daily charts while MACD gave a bearish crossover on 24 February which suggests that the near term trend is likely to be on the downside.

The last time when this indicator gave a sell signal was on January 28 and the Nifty tested 11,600 levels before bouncing back.

The Nifty appears to have stretched on the downside by abnormally trading away from its short term moving averages (5-Day SMA at 11903) which should ideally pave the way for a pullback rally sooner than later.

In the next trading session if Nifty opens in a negative terrain then it can make an intraday bottom somewhere in the zone of 11,640 – 11,600 levels, suggest experts. But, if it closes below 11,614 levels then next support for the index is available only around 11,500 levels

“On the upside, if it manages to sustain above 11,783 then the upswing shall get extended upto 11,900 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“For time being traders with high-risk appetite are advised to create long positions if Nifty opens in a negative zone and trades between 11640 – 615 levels with a stop below 11600 on closing basis,” he said.

Three levels: 11600, 11783, 11900

Max Call OI: 12000, 11900

Max Put OI: 11700, 11500

Stocks in the news: 

Hindustan Unilever: NCLT approved Scheme Of Amalgamation and agreement between GSK Consumer Health and HUL.

RITES: Government to sell up to 5 percent stake in the company via OFS, floor price set at Rs 298 per share.

Billionaire Radhakishan Shivkishan Damani and his brother Gopikishan Damani increased their stake in India Cements for the second consecutive day, taking the total shareholding in the company to 11.58 percent on February 26.

Technical Recommendations:

We spoke to Bonanza Portfolio and here’s what they have to recommend:

Deepak Nitrite Ltd: Buy| LTP: Rs.502| Target: Rs 557| Stop Loss: Rs.476| Upside 11%

Garware Technical Fibres Ltd: Buy| LTP: Rs.1647| Target: Rs 1890|Stop Loss Rs.1440|Upside 14%

Tube Investments of India: Buy| LTP: Rs.551| Target: Rs 620|Stop Loss Rs.520| Upsdie 12%

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Feb 27, 2020 08:40 am
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